When you are accustomed to saving a high percentage of income every month, quitting your job and living off your portfolio can be intimidating. It was for us, at least
Now instead of receiving a steady stream of paychecks, making big contributions to a 401k and depositing healthy sums into a brokerage account each month, suddenly money is flowing out of those accounts!
And unlike a paycheck, income is inconsistent. Some months, dividends and interest cover all of our expenses. Most months, it doesn’t.
To further complicate things, there is a mix of 401k/IRA, Roth, and Brokerage accounts with different rules and tax treatment for withdrawals, as well as typical checking and savings accounts.
Should we spend the money in our taxable Brokerage account now, allowing the money in the 401k/IRA to continue to grow? What if we need a lump sum for a large expense? Should we keep a large cash buffer? Should dividends be automatically reinvested or deposited as cash? Does it make sense to harvest capital gains for cash spending?
I’ll share how we manage our Cash Flow, and hopefully answer these questions and more
No matter what you do for a living, some days are better than others. There were times when I couldn’t wait to go to work, when I was excited to make a big presentation or when I felt that today was the day we would make a big breakthrough.
Other times, a sense of dread would start to set in late Sunday afternoon. My blood pressure would rise until I could feel it pumping in my ears, and I would feel like running away, going anywhere but back to the office
In times like these, I would sometimes sit down and look at the portfolio and think, “Where can we retire today?”
And then I was able to make it through another Monday
I recently shared some thoughts on how to become Financially Independent in the shortest possible time by leveraging tax advantaged accounts such as the 401k, 403b, HSA, and Traditional IRA. Taking advantage of all possible tax deductions Today is a great way to Turbocharge Your Savings, accelerating Financial Independence by years
I even made some disparaging remarks about the Roth IRA. Some reader’s pushed back, which is always a good thing.
I will explain the reasons that I believe the Roth 401k and IRA are the least advantageous investment choices. Furthermore, I will provide an overall recommendation for where to save for Financial Independence
I’m not going to lie, being financially independent is nice. It enables choice and opportunity. We can choose to earn an income, or not. We can choose to remain in one location, or not. We can pretty much choose to do anything we want, when we want, and how we want.
In fact, I’m pretty sure there is only one thing better than being financially independent: Being financially independent SOONER!
How would you like to accelerate your savings, becoming financially independent years ahead of schedule? What if you could do this without saving even 1 extra dollar? Not one!
It just happened. Not in the way good things happen when you aren’t expecting it, more in the way of how you might describe a horrible accident
“This guy was crossing the street, and a big truck just came out of nowhere, and BOOM… it happened”
Back in 2006 the real estate market in the Seattle area was hot. Prices were on the rise, and the press was full of stories of people making tons of cash rehabbing properties. People were even quitting their day jobs to flip houses.
I had taken advantage of the hot market to sell my own house, choosing instead to live in a small apartment in a walkable neighborhood. I wasn’t interested in real estate myself, but I was interested in building some passive income streams
House flippers were in need of short term cash. As it so happened, I had some. So I started lending money to a few people with incredible return rates. They would get the cash they needed to remodel a house for 2-6 months, I would get a percentage of the profit from the sale of the home. Yield was sometimes 10-20% per month!
This was great! What could possibly go wrong? A lot, apparently
